Dollarization and production: An impact evaluation
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Published:
Jun 29, 2026
Keywords:
Money, Employment, Simulation Methods, Production, Monetary Sistems
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Abstract
Different exchange rate regimes have been widely discussed in the literature regarding their impact on production, interest rates, and the way they address external shocks. However, the official dollarization of an economy has not received the same level of attention, particularly in the empirical literature linking it to the performance of the real sector. This research conducts an impact evaluation of the monetary regime change on production in Ecuador during the period 1980-2017. The synthetic control method is used, as it is generally implemented to evaluate the impact of policies on aggregate units. The results show a positive impact on GDP per capita as a result of the dollarization of the Ecuadorian economy. This impact is estimated at an additional USD 454.87 per year, on average, to GDP per capita.
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Pozo Barrera, A. (2026). Dollarization and production: An impact evaluation. Cuestiones Económicas, 36(1), Autor: Anthony Pozo Barrera. https://doi.org/10.47550/RCE/36.1.1
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Artículos de Investigación
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References
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Arellano, C., & Heathcote, J. (2010). Dollarization and financial integration. Journal of Economic Theory, 145(3), 944-973. https://doi.org/10.1016/j.jet.2009.08.002
Athey, S., & Imbens, G. W. (2017). The State of Applied Econometrics: Causality and Policy Evaluation. Journal of Economic Perspectives, 31(2), 3-32. https://doi.org/10.1257/jep.31.2.3
Becker, M., & Klößner, S. (2018). Fast and reliable computation of generalized synthetic controls. Econometrics and Statistics, 5, 1-19. https://doi.org/10.1016/j.ecosta.2017.08.002
Berg, A., & Borensztein, E. (2000). The Dollarization Debate. Finance and Development, 37(1), 38-41. https://www.imf.org/external/pubs/ft/fandd/2000/03/berg.htm
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Cachanosky, N., Ocampo, E., Hernández, K. C., & Ramseur, J. (2024). Did dollarization help Ecuador? Scottish Journal of Political Economy, 72(1). https://doi.org/10.1111/sjpe.12397
Cachanosky, N., Salter, A. W., & Savanti, I. (2022). Can dollarization constrain a populist leader? The case of Rafael Correa in Ecuador. Journal of Economic Behavior & Organization, 200, 430-442. https://doi.org/10.1016/j.jebo.2022.06.006
Campos, N. F., Coricelli, F., & Moretti, L. (2014). Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2432446
Díaz, J. P. (2023). Does dollarization promote trade? Evidence from two recent episodes. Applied Economics, 56(17), 2058-2076. https://doi.org/10.1080/00036846.2023.2178632
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Eichengreen, B. (2001). What problems can dollarization solve? Journal of Policy Modeling, 23(3), 267-277. https://doi.org/10.1016/s0161-8938(01)00046-1
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36
Gachet, A. N. (2018). Dollarization and Trade Through the Lens of History. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3219466
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Hallren, R. J. (2014). The Impact of Dollarization and Currency Boards on Income and Inflation: A Synthetic Control Analysis. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2486253
Heckman, J. J., & Vytlacil, E. J. (2007). Chapter 70 Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation (pp. 4779-4874). Elsevier. https://doi.org/10.1016/s1573-4412(07)06070-9
Imbens, G. W. (2004). Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review. Review of Economics and Statistics, 86(1), 4-29. https://doi.org/10.1162/003465304323023651
International Monetary Fund. (2023). Annual Report on Exchange Arrangements and Exchange Restrictions 2022. International Monetary Fund. https://doi.org/10.5089/9798400235269.012
Levy-Yeyati, E., & Sturzenegger, F. (2002). Dollarization: A Primer. En E. Levy-Yeyati & F. Sturzenegger (Eds.), Dollarization: Debates and Policy Alternatives (pp. 1-52). The MIT Press. https://doi.org/10.7551/mitpress/2481.003.0002
Linden, A., & Adams, J. L. (2010). Applying a propensity score-based weighting model to interrupted time series data: improving causal inference in programme evaluation. Journal of Evaluation in Clinical Practice, 17(6), 1231-1238. https://doi.org/10.1111/j.1365-2753.2010.01504.x
Missaglia, M. (2021). Understanding Dollarisation: A Keynesian/Kaleckian Perspective. Review of Political Economy, 33(4), 656-686. https://doi.org/10.1080/09538259.2020.1869401
Ontaneda, D. (2017). El impacto de la dolarización oficial en la profundización financiera en Ecuador. Cuestiones Económicas, 27(1), 13-43. http://repositorio.bce.ec/handle/32000/2347
Ponce, G. O. A. V., & Noroña, P. E. B. (2021). Importancia del comercio intrarregional en el crecimiento de América Latina. E-IDEA 4.0 Revista Multidisciplinar, 3(6), 1-15. https://doi.org/10.53734/mj.vol3.id154
Pouliot, G. A., Xie, Z., & Liu, Z. (2022). Degrees of Freedom and Information Criteria for the Synthetic Control Method. https://doi.org/10.48550/ARXIV.2207.02943
Quispe-Agnoli, M., & Whisler, E. (2006). Official dollarization and the banking system in Ecuador and El Salvador. Economic Review (Atlanta, Ga.), 91(3), 55-73.
Sánchez-Reaza, J. (2010). Comercio, proximidad y crecimiento: El impacto de la integración económica en las disparidades regionales en México. Integración & Comercio, (31), 23-37. https://publications.iadb.org/es/integracion-comercio-no-31--julio-diciembre-2010
Sandoval Vinelli, S. G. (2020). A monetary model for a fully dollarized economy [Tesis de Maestría, Universidad San Francisco de Quito]. http://repositorio.usfq.edu.ec/handle/23000/10484
Segovia-Larrea, S. (2020a). 20 años de dolarización de la economía ecuatoriana: Análisis del sector externo (Nota Técnica No. 82; pp. 1-41). Banco Central del Ecuador. https://www.bce.fin.ec/micrositio20dolarizacion/sector-externo.html
Segovia-Larrea, S. (2020b). 20 años de dolarización de la economía ecuatoriana: Análisis del sector real e indicadores (Nota Técnica No. 81; pp. 1-78). Banco Central del Ecuador. https://www.bce.fin.ec/micrositio20dolarizacion/sector-real.html
Valencia, A. (2009). Ecuador repatriará unos 1.600 mlns dlrs de reservas. Reuters. https://www.reuters.com/article/idUSSIE57Q020/
Vernengo, M., & Bradbury, M. (2011). The Limits to Dollarization in Ecuador: Lessons from Argentina. Journal of World-Systems Research, 457-462. https://doi.org/10.5195/jwsr.2011.403
Yepes, J. P. (2016). Dollarization and growth: A synthetic control approach to Ecuador and El Salvador’s cases [Master's thesis, Baylor University]. https://baylor-ir.tdl.org/handle/2104/9617
38
Abadie, A., Diamond, A., & Hainmueller, J. (2010). Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program. Journal of the American Statistical Association, 105(490), 493-505. https://doi.org/10.1198/jasa.2009.ap08746
Abadie, A., Diamond, A., & Hainmueller, J. (2014). Comparative Politics and the Synthetic Control Method. American Journal of Political Science, 59(2), 495-510. https://doi.org/10.1111/ajps.12116
Abadie, A., & Gardeazabal, J. (2003). The Economic Costs of Conflict: A Case Study of the Basque Country. American Economic Review, 93(1), 113-132. https://doi.org/10.1257/000282803321455188
Arellano, C., & Heathcote, J. (2010). Dollarization and financial integration. Journal of Economic Theory, 145(3), 944-973. https://doi.org/10.1016/j.jet.2009.08.002
Athey, S., & Imbens, G. W. (2017). The State of Applied Econometrics: Causality and Policy Evaluation. Journal of Economic Perspectives, 31(2), 3-32. https://doi.org/10.1257/jep.31.2.3
Becker, M., & Klößner, S. (2018). Fast and reliable computation of generalized synthetic controls. Econometrics and Statistics, 5, 1-19. https://doi.org/10.1016/j.ecosta.2017.08.002
Berg, A., & Borensztein, E. (2000). The Dollarization Debate. Finance and Development, 37(1), 38-41. https://www.imf.org/external/pubs/ft/fandd/2000/03/berg.htm
Cachanosky, N., Ocampo, E., & Salter, A. W. (2023). Lessons from Dollarization in Latin America in the 21st Century. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4318258
Cachanosky, N., Ocampo, E., Hernández, K. C., & Ramseur, J. (2024). Did dollarization help Ecuador? Scottish Journal of Political Economy, 72(1). https://doi.org/10.1111/sjpe.12397
Cachanosky, N., Salter, A. W., & Savanti, I. (2022). Can dollarization constrain a populist leader? The case of Rafael Correa in Ecuador. Journal of Economic Behavior & Organization, 200, 430-442. https://doi.org/10.1016/j.jebo.2022.06.006
Campos, N. F., Coricelli, F., & Moretti, L. (2014). Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2432446
Díaz, J. P. (2023). Does dollarization promote trade? Evidence from two recent episodes. Applied Economics, 56(17), 2058-2076. https://doi.org/10.1080/00036846.2023.2178632
Edwards, S., & Magendzo, I. I. (2003). Dollarization and economic performance: What do we really know? International Journal of Finance & Economics, 8(4), 351-363. https://doi.org/10.1002/ijfe.217
Eichengreen, B. (2001). What problems can dollarization solve? Journal of Policy Modeling, 23(3), 267-277. https://doi.org/10.1016/s0161-8938(01)00046-1
Fernández, J. (2019). Elementos de análisis para la sostenibilidad de una economía dolarizada. Revista Economía, 69(109), 189-212. https://doi.org/10.29166/economia.v69i109.2038
36
Gachet, A. N. (2018). Dollarization and Trade Through the Lens of History. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3219466
García-Albán, F., González-Astudillo, M., & Vera-Albán, C. (2020). Good Luck or Good Policy? An Analysis of the Effects of Oil Revenue and Fiscal Policy Shocks: The Case of Ecuador (MPRA Paper No. 102592). Munich Personal RePEc Archive. https://mpra.ub.uni-muenchen.de/102592/
Goldstein, M. (2002). Dollarization. En Managed Floating Plus (pp. 33-42). Peterson Institute for International Economics.
González-Astudillo, M. (2019). Dolarización: efectos y riesgos en el caso ecuatoriano. En M. Villalba (Ed.), Dolarización: dos décadas después (pp. 95-110). Editorial Abya Yala. https://mpra.ub.uni-muenchen.de/98250/
Hallren, R. J. (2014). The Impact of Dollarization and Currency Boards on Income and Inflation: A Synthetic Control Analysis. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2486253
Heckman, J. J., & Vytlacil, E. J. (2007). Chapter 70 Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation (pp. 4779-4874). Elsevier. https://doi.org/10.1016/s1573-4412(07)06070-9
Imbens, G. W. (2004). Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review. Review of Economics and Statistics, 86(1), 4-29. https://doi.org/10.1162/003465304323023651
International Monetary Fund. (2023). Annual Report on Exchange Arrangements and Exchange Restrictions 2022. International Monetary Fund. https://doi.org/10.5089/9798400235269.012
Levy-Yeyati, E., & Sturzenegger, F. (2002). Dollarization: A Primer. En E. Levy-Yeyati & F. Sturzenegger (Eds.), Dollarization: Debates and Policy Alternatives (pp. 1-52). The MIT Press. https://doi.org/10.7551/mitpress/2481.003.0002
Linden, A., & Adams, J. L. (2010). Applying a propensity score-based weighting model to interrupted time series data: improving causal inference in programme evaluation. Journal of Evaluation in Clinical Practice, 17(6), 1231-1238. https://doi.org/10.1111/j.1365-2753.2010.01504.x
Missaglia, M. (2021). Understanding Dollarisation: A Keynesian/Kaleckian Perspective. Review of Political Economy, 33(4), 656-686. https://doi.org/10.1080/09538259.2020.1869401
Ontaneda, D. (2017). El impacto de la dolarización oficial en la profundización financiera en Ecuador. Cuestiones Económicas, 27(1), 13-43. http://repositorio.bce.ec/handle/32000/2347
Ponce, G. O. A. V., & Noroña, P. E. B. (2021). Importancia del comercio intrarregional en el crecimiento de América Latina. E-IDEA 4.0 Revista Multidisciplinar, 3(6), 1-15. https://doi.org/10.53734/mj.vol3.id154
Pouliot, G. A., Xie, Z., & Liu, Z. (2022). Degrees of Freedom and Information Criteria for the Synthetic Control Method. https://doi.org/10.48550/ARXIV.2207.02943
Quispe-Agnoli, M., & Whisler, E. (2006). Official dollarization and the banking system in Ecuador and El Salvador. Economic Review (Atlanta, Ga.), 91(3), 55-73.
Sánchez-Reaza, J. (2010). Comercio, proximidad y crecimiento: El impacto de la integración económica en las disparidades regionales en México. Integración & Comercio, (31), 23-37. https://publications.iadb.org/es/integracion-comercio-no-31--julio-diciembre-2010
Sandoval Vinelli, S. G. (2020). A monetary model for a fully dollarized economy [Tesis de Maestría, Universidad San Francisco de Quito]. http://repositorio.usfq.edu.ec/handle/23000/10484
Segovia-Larrea, S. (2020a). 20 años de dolarización de la economía ecuatoriana: Análisis del sector externo (Nota Técnica No. 82; pp. 1-41). Banco Central del Ecuador. https://www.bce.fin.ec/micrositio20dolarizacion/sector-externo.html
Segovia-Larrea, S. (2020b). 20 años de dolarización de la economía ecuatoriana: Análisis del sector real e indicadores (Nota Técnica No. 81; pp. 1-78). Banco Central del Ecuador. https://www.bce.fin.ec/micrositio20dolarizacion/sector-real.html
Valencia, A. (2009). Ecuador repatriará unos 1.600 mlns dlrs de reservas. Reuters. https://www.reuters.com/article/idUSSIE57Q020/
Vernengo, M., & Bradbury, M. (2011). The Limits to Dollarization in Ecuador: Lessons from Argentina. Journal of World-Systems Research, 457-462. https://doi.org/10.5195/jwsr.2011.403
Yepes, J. P. (2016). Dollarization and growth: A synthetic control approach to Ecuador and El Salvador’s cases [Master's thesis, Baylor University]. https://baylor-ir.tdl.org/handle/2104/9617
38